Giuliani wants to reduce the regulation of health insurance and change federal tax law that pushes people into expensive, all-inclusive plans.

Republicans need to fix health care, education, tax reform and re examine drug policy.

The GOP Debate Over Health-Care Reform
By Michael Tanner
CNSNews.com Commentary
July 30, 2007

The long-simmering battle for the soul of the Republican Party may be about to erupt, not over immigration or Iraq, but over the unlikeliest of issues: health care.

As I wrote about in my book, "Leviathan on the Right," Republicans have been increasingly split between traditional Reagan-Goldwater small-government conservatives and a new breed of "big-government conservatives" who believe in using an activist government to achieve conservative ends -- even if it means increasing the size, cost and power of government in the process.

The difference in the two camps is as clear as the difference between Ronald Reagan saying that "government is not the solution to our problem; government is the problem," and George W. Bush saying: "we have a responsibility that when somebody hurts, government has got to move."

Bush's brand of big-government conservatism brought us No Child Left Behind, the Medicare prescription drug benefit and a 23 percent increase in domestic discretionary spending. It may well have cost Republicans control of Congress. After all, on election night 2006, 55 percent of voters said that they thought the Republican Party was the party of big government.

Now, the Republican primary campaign raises the question of whether the party will continue down the Bush path or will return to its Reagan-Goldwater roots. And the coming debate over health-care reform may clearly expose the split.

Former Massachusetts Governor Mitt Romney has embraced the big-government approach. He has joined Democrats in calling for universal health coverage. The plan he supported in Massachusetts is a variation of "HillaryCare." It has received most of its attention for its unprecedented individual mandate, a requirement that every Massachusetts citizen purchase health insurance or face legal penalties. This represents the first time that a state has said that a citizen, simply by virtue of living in a state, must purchase a specific government designated and designed product.

But even more significantly, Romney's plan also created a managed competition-style regulatory authority called the Massachusetts Health Care Connector. This new regulatory body has already mandated that every health-care policy sold in the state must cover prescription drugs and has outlawed policies with deductibles of more than $2,000.

And Romney has joined Democrats in spending more to subsidize health care for the poor and middle class. In Massachusetts, he significantly increased Medicaid eligibility and provided taxpayer-funded subsidies for families of four earning as much as $62,000 a year, effectively extending welfare well into the middle class.

It is very hard to reconcile Romney's vision of health-care reform with traditional small-government conservatism.

In contrast, the traditional conservative approach to health care so far is being carried by former New York Mayor Rudy Giuliani. Giuliani, who will release a detailed health-care plan later this summer, believes that the biggest problem facing American health care is not a lack of universal coverage, but a lack of consumer choice. "It's your health; you should own your own insurance," he said in Tuesday's debate. "The reality is that we need a free market."

Giuliani wants to reduce the regulation of health insurance and change federal tax law that pushes people into expensive, all-inclusive plans. He says health insurance should be more like car insurance, where people pay out of pocket for minor repairs and maintenance but are protected against catastrophic costs. In pursuit of this goal, he has called for calling for expansion of Health Savings Accounts and replacing the current tax exclusion for employer-provided health care with a standard deduction for health insurance.

This is not a question of the merits of either candidate but a fundamental question about the direction of the Republican Party and the conservative movement in general. Being a conservative Republican should be about more than abortion policy and the War on Terror. The candidates should have to tell voters whether they still believe in traditional principles of limited government, federalism and individual liberty.

The debate over health care reform may offer voters the first opportunity to ask this question.